Chinese charge four Rio workers with espionage

CHINA FORMALLY arrested four employees of the Anglo-Australian mining giant Rio Tinto yesterday, and charged them with commercial espionage, a less serious accusation than previous claims of stealing state secrets.

The four Rio employees, including Stern Hu, an Australian national from Shanghai who heads up Rio’s iron ore business, were charged with bribery and “obtaining commercial secrets about China’s steel and iron industries,” the Xinhua news agency reported.

Initially, the Chinese government indicated that the Rio workers, who have been held since July 5th amid hard-fought iron ore price talks with Chinese steel mills, might face the much more serious charge of stealing state secrets, but the report made no mention of espionage.

The bribery charge carries a maximum seven-year jail sentence and could even be commuted to a fine.

The Xinhua agency said Chinese prosecutors had found evidence of bribery. It said some individuals in Chinese steel and iron companies were suspected of providing the Rio employees with commercial secrets, although no specific details were given.

Rio Tinto’s iron ore chief executive Sam Walsh said the company had done no wrong. “The charges have been downgraded, and I think that reflects what we’ve been saying all along, that we don’t, in fact, believe there’s any evidence of wrongdoing,” he told the Australian newspaper.

The Australian government urged Beijing to let Mr Hu consult with a lawyer. Relations have been under strain between Australia and China, its second-biggest trading partner, since the detentions early last month.

Many believe the row was kicked off by Rio’s rejection in June of a bid by the Chinese state-owned company Chinalco to buy a $19.5 billion (€13.8 billion) stake in Rio Tinto.

The deal was abandoned by Rio in favour of a link-up with its fellow Anglo-Australian miner BHP Billiton, four months after it had agreed to what would have been China’s biggest overseas investment.

The Rio row has cast a shadow over this year’s iron ore talks and also affected shares in Rio, which is the world’s second-largest iron ore exporter.

The row has already done some damage to China’s image as a trouble-free place to do business and vice-commerce minister Fu Ziying struck a conciliatory tone at a news conference in Beijing.

“We believe Chinese judicial organs will make a fair ruling on the case based on the facts and in accordance with law. There is no question about that,” said Mr Fu.

He went on to say that China was determined to promote fair competition and insisted the case would not harm trade relations between the two countries.

Temperatures were raised at the weekend by remarks carried on a website linked to the Chinese National Administration for the Protection of State Secrets, which accused Rio Tinto of six years of “industrial espionage” that had cost the country 700 billion yuan (€494 billion) in overcharging for iron ore.